Alistair Darling’s efforts to resuscitate Britain’s financial services sector seem, for the moment at least, to have worked.
But in a world where £17bn can be wiped off banks’ shares on the basis of a blog by the BBC’s business editor, anything could happen. All we know is that the winds sweeping through finance and now commerce are so powerful that whatever unilateral actions Britain takes are not guaranteed to fend off catastrophe. Even the co-ordinated cut in interest rates around the world may make all the difference, or no difference at all. What we do know is that if stability does return, not many in construction will look forward with confidence to the months ahead – despite all the firms that are making healthy profits (see financial news).
What will be the attitude to lending by the banks now? The bigger housebuilders are looking reasonably safe on the basis that their lenders are sitting in the same leaky boat as they are. Indebted small and medium-sized housebuilders look more vulnerable – and what about smaller contractors who were hung out to dry by the banks in the last recession? Then there is the growing question mark over public spending: the government is borrowing vast amounts to save the banks, so how is it going to fund the major public works that the construction industry is becoming so dependent on?
On the other hand, we know that construction plc is not a business that can go bust: we’re always going to need buildings and infrastructure. And the indications are that when the recovery does come it will be more sprightly than the nineties. But how do we ensure that we have the capacity to cope when it does? The aim, of course, is to survive the downturn without the wholesale deskilling we had last time, but already we have abundant evidence of apprenticeships being cut and of graduates failing to find work. In his column this week, Richard Steer argues that the industry mustn’t suffer another lost generation (page 38). But the world has become a short-term place right now. And tragic as it is, it’s hard to see history not repeating itself.
The bigger housebuilders are looking reasonably safe on the basis that the banks are sitting in the same leaky boat as they are
Hello, I must be going
So we’ve got yet another new construction minister. No surprises there. We are governed by people who stop to chat while their replacement is already taking off their coat. And frankly, if Shriti Vadera’s skills can be put to use rescuing the banking system, then her loss is a sacrifice worth making. By all accounts Ian Pearson, the new man in the job, is bright and diligent and will no doubt make a few of the right noises before he goes, too. The best thing he can do before he does is to ensure we get a chief construction officer of standing. The government agreed last Thursday to proceed with this idea, a key recommendation of last month’s Construction Matters select committee report. It’s a great bit of news, as it will bring the political continuity that the industry so desperately needs. In his time as chief scientific officer, David King transformed government policy on a whole host of issues. All we need now is someone who has the business nous to command the respect of the sector, combined with the political wherewithal of Peter Mandelson. Then they just might make a difference.
Denise Chevin, editor